Friday, May 01, 2009

There is No Gender Pay Gap in the UK: Having Children Is Decisive Factor, Not Being a Woman

UK Telegraph -- Harriet Harman claims that women earn on average 22.6% less per hour than men and takes it for granted that this difference is the result of discrimination against women by men. And yet the Government's own figures support no such conclusion.

Three official surveys are used by the Office for National Statistics (ONS): a survey of employers called ASHE (the annual survey of hours and earnings), a survey of households (the Labour Force Survey) and the panel dataset of the New Earnings Survey, which provides information from 1975 to 2006.

According to ASHE, in 2007 a gender pay gap does not open up until women reach about 30 years of age. From ages 18-29 there is hardly any difference and, according to the Labour Force Survey (LFS), women aged 22-29 are paid on average slightly more per hour than men. As the ONS concludes, having children is the decisive factor, not being a woman.

Historical data confirm this conclusion. Based on the New Earnings Survey panel data, in 1975 there was a pay gap from the age of 18 onwards, but in 2006 no such gap existed until age 34. Why? In 1975 women tended to have children in their 20s and by 2006 it was more common to have them in their 30s. As the average age of child-rearing increased so too did the age at which the pay gap kicked in.

The truth is that the vital difference is not between men and women but between women with dependent children and everyone else, whether male or female. The hourly rate of pay for women who are neither married nor cohabiting is slightly higher than for men in the same situation. For men and women who are married or cohabiting the hourly pay gap is 14.5% and the gap widens with the number of children. Women with one dependent child earn on average 12.3% less than men and with four or more dependent children 35.5% less.

Quite simply the Government's emphasis on the gender pay gap of 22.6% is an abuse of official statistics. And to infer that the difference in the average hourly rate is the result of discrimination is an abuse of logic. When women without dependent children compete head to head with men in the same situation their hourly rate is higher. Most women today work throughout their 20s and find that success is the result of being good at something. Employers are looking for capable people whether male or female.

Women today don't need government quotas. They are doing fine on their own. They want to be judged on their merits, not patronised by the old generation of 1970s quota feminists like Harriet Harman.

MP: Labor market studies in the U.S. have also found that motherhood and marriage explain much more of the pay gap than sex discrimination. For example, a 2005 NBER study concludes that:

"There is no gender gap in wages among men and women with similar family roles. Comparing the wage gap between women and men ages 35-43 who have never married and never had a child, we find a small observed gap in favor of women, which becomes insignificant after accounting for differences in skills and job and workplace characteristics."

3 Comments:

Also, a January 2009, Department of Labor report (see link below) said that US gender wage comparison studies use wages instead of total compensation.

"[M]uch of the literature, including the Bureau of Labor Statistics Highlights of Women’s Earnings, focus on wages rather than total compensation. Research indicates that women may value non-wage benefits more than men do, and as a result prefer to take a greater portion of their compensation in the form of health insurance and other fringe benefits."

In the UK, health care and other benefits are government provided so the wage compensation difference is not as great as in the US.